Are US bonds a good investment vehicle now? What happens to commodities now?
Paula Rabke
Nov. 15, 2008

US bonds are not cheap right now. The flight to quality has created the biggest drop in long-term rates while the short-term rates have plummeted.

Something interesting is happening behind the scene right now. The commodities have shown some classical signs of bull market. After a record run up for several years (without much correction) it gave up 62% of the gains in a short few months but created the stealth signature of the biggest bull move coming.

The commodities may be in for a big bull market now while the economies of the world remain in deep pockets of depression. The rise in commodity prices will come from lack of supply. Essential commodities will sharply rise in price in the next several years.

The long term bonds will collapse in price. The stock market will get devastated. The short-term rates controlled by the Fed will remain close to zero just like in Japan. Rising long term rates and low short-term rates will make commodities safe heaven.

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